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Credit intelligence: A more robust alternative to current commercial loan modelling approaches

Author

Listed:
  • Kahrim, Neil

    (OakNorth, USA)

  • Hunter, Sean

    (OakNorth Analytical Intelligence, UK)

Abstract

Most commercial lending is based on a decision-making process and modelling approach largely unchanged by technology. By adopting a data-driven alternative that takes into account the fundamental differences between businesses, lenders are able to make data-driven decisions that will ultimately lead to better credit outcomes. This paper aims to briefly outline some of the limitations of the current approach to commercial lending and suggest improvements (collectively, ‘credit intelligence’), taking specific note of lessons of the current COVID-19 crisis and how this has transformed the economic landscape. It also provides a case study (OakNorth in the UK) where these principles have been implemented and notes the promising results so far.

Suggested Citation

  • Kahrim, Neil & Hunter, Sean, 2021. "Credit intelligence: A more robust alternative to current commercial loan modelling approaches," Journal of Digital Banking, Henry Stewart Publications, vol. 6(1), pages 25-32, June.
    • Handle: RePEc:aza:jdb000:y:2021:v:6:i:1:p:25-32
    as

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    More about this item

    Keywords

    credit intelligence; credit risk; portfolio monitoring; commercial lending; commercial banking;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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